1. Haba Yousif Lassal Inungu Joe Elian
Ponzi scheme
Haba Yousif
Lassal Inungu
Joe Elian

2. Why you should care… A ponzi scheme can target anyone
It is vital to understand what it is and how it works
How to avoid it
Effect on our economy
Government actions toward these scandals

3. WHAT IS A PONZI SCHEME? Named after Charles Ponzi
Also known as a “Pyramid Scheme”
It is an investment fraud that promises high returns with little risk.

4. How a ponzi scheme worksB C D E F

5. How to identify a ponzi scheme
High Profit Returns with Little or no Risk
Consistent Returns
Unlicensed Sellers
Unregistered Investments
Private and/or Complex Strategies
Issues with Paperwork

6. How a ponzi scheme fails
Usually fails when there are no more investors.
Collapses under its own weight
Securities and Exchange committee discovers the Ponzi Scheme

7. Effects of Ponzi Schemes on Economy
Pump and Dump Method Q
Methodology of the Fraud
Over the Counter

8. Effects of Ponzi Schemes on Economy
Johnathan Lebed
Enron
Short and Distort

9. Biggest Ponzi Scheme Chairman of Nasdaq
He ran a $56 billion ponzi scheme for over a decade
He was discovered by the Security Exchange Commission in 2008.
Investors included banks, celebrities, and everyday hard-working people.

10. IT’S ALL FUN TILL YOU get CAUGHT
Madoff pleaded guilty to all eleven felony counts.
Sentenced to 150 years in jail.
Madoff’s lawyer pleaded for 12 years.
The judge was particularly moved by one victim’s statement.

11. What about the investors?
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They are receiving…
Tax breaks
Payouts from the Securities Investor Protection Corp.
The tax breaks are helping out a lot of victims.
Victims can recover a good 40% in their losses.
However, it is not helping everyone.

12. After the Madoff SCANDAL…
Legislators and judges are ruling tough sentences on people using a ponzi scheme.
James Nicholson was sentenced to 40 years in prison for defrauding investors of $141 million.
Martin Royster may be serving up to 10 years in prison for his $2 million ponzi scheme.

13. Public opinion $56 billion dollars gave Madoff many enemies.
The scandal also played an important factor in Wall Street’s image.
According to NBC and Wall Street Journal poll, it shows that 58% do not trust the stock market.
Lawmakers are pressured by lobbyists to weaken the reform legislation.

14. The michigan case
Reviewing Ponzi Scheme, it is important to understand what aspect should raise a red flag.
For example in the Royster case he:
Promised a 240% annual return on investments
Investors received no financial statements
Royster didn’t provide any paper or documentation that the products were registered with the state.